Make Ends Meet: Your credit health in a pandemic
LOUISVILLE, Ky. (WAVE) - COVID-19 not only caused devastating loss of life, but it decimated the nation’s economy as businesses were temporarily or permanently closed and many families faced financial strain and mounting stress.
Many families have been faced with complex decisions when it comes to what bills they pay first to keep the household afloat. Trying to figure out what you can afford to pay and who you should pay immediately when your finances have been hit hard by the pandemic is not only hard on your bank account, but it can also weigh heavy on your peace of mind.
TransUnion, an American consumer and credit reporting agency, recently conducted an in-depth research study on consumer debt payment both domestically and across the globe.
“What we’re finding is when faced with those difficult decisions of which loans to keep paying it’s mortgages versus auto loans and credit cards,” shared Matt Komos, TransUnion Vice President of U.S. Research and Consulting.
The company closely studied how people are prioritizing debt during the pandemic. It has had a profound impact on most all aspects of life in the last year, and for many people that has led to financial stress.
“They have had to keep on top of those payments as best as possible as they’ve been staying home in lock-down or working from home,” stressed Komos. “Mortgages became kind of prioritized relative to auto loans and credit cards.”
As we finally get some control over the coronavirus crisis many peoples finances are still flat lined.
“Many lenders have been willing to provide some form of accommodation for hardship to try to help consumers bridge the gap between where they’re at today and hopefully getting employed again or getting more hours back,” explained Komos.
Lenders can only do so much. The real work starts with you.
“Talk to your lenders,” Komos proclaimed. “We’ve seen throughout the pandemic that many lenders have been willing to help consumers and so when that consumer is facing difficult times it’s important to take action. Understand your options.”
Staying on top of your credit report is also important. Checking your credit history and credit score can help you better understand your credit health. It can also make you aware of what lenders will see when they check your credit history and score. It can also keep you on top of any inaccurate information or identity theft.
“Make sure that people aren’t nefariously accessing your credit,” Komos stresses.
To maintain a healthy credit score, it’s important to keep your credit utilization rate low. Credit utilization is the ratio of your outstanding credit card balances to your credit card limits. It measures the amount of available credit you are using.
“Keep your utilization on your credit card below 30%,” explains Komos. “If there are credit cards you have that you haven’t been using you can always use those for a small purchase and then pay the balance off in full.”
If you do have debt make sure you
- Pay your bills on time
- Make at least the minimum payment
- Call your lender if you find yourself in financial trouble
“Make sure you stay on top of those loans you have outstanding,” Komos said. “Make your payments on time.”
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